Why was reported revenue flat if the business grew strongly?

A previously communicated customer contract expiration (OptumRx, which contributed $8.7B of revenue in the prior-year quarter) offset growth. Excluding that impact, revenue grew 19% to $54.9B, and Pharmaceutical and Specialty Solutions revenue grew 20%.

How did GAAP and non-GAAP results differ this quarter?

GAAP operating earnings of $730M were boosted by a $105M net litigation recovery and a $17M net gain on asset disposals, while non-GAAP operating earnings of $807M excluded these items as well as $152M of amortization and acquisition-related costs. Non-GAAP diluted EPS of $2.35 (up 13%) is the figure management uses to frame guidance.

What drove the guidance raise and what are the outlook risks?

The raise reflects stronger Pharmaceutical and Specialty Solutions segment profit growth (11.5%-12.5%), higher Other segment growth (16%-18%) including the Advanced Diabetes Supply Group acquisition, lower interest expense, and fewer shares. Risks include macro uncertainty, tariffs, generic deflation, branded drug pricing policy, and a Department of Justice investigation into Anti-Kickback Statute and False Claims Act matters. Management will provide more fiscal 2026 detail at its June 12, 2025 Investor Day.

CAH 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed May 1, 2025. Cited figures are marked; the original filing is the authoritative source.

Cardinal Health reported fiscal Q3 2025 (quarter ended March 31, 2025) results that beat its own run-rate and raised full-year guidance.

Reported revenue was flat at $54.9 billion^a, but this reflects the expiration of a previously communicated customer contract (OptumRx); excluding that impact, revenue grew 19%. GAAP operating earnings rose 98% to $730 million and GAAP diluted EPS was $2.10, though GAAP results were inflated by a $105 million litigation recovery. Non-GAAP operating earnings grew 21% to $807 million and non-GAAP diluted EPS rose 13% to $2.35, driven by segment profit growth across all operating segments.

Management raised and narrowed fiscal 2025 non-GAAP EPS guidance to $8.05^b-$8.15, from $7.85-$8.00. The raise was driven by higher Pharmaceutical and Specialty Solutions segment profit growth (now 11.5%-12.5%) and stronger Other segment profit growth (16%-18%), including the completed acquisition of Advanced Diabetes Supply Group. Lower interest and other expense guidance and a slightly reduced share count (~242 million) also contributed.

Management reiterated expectations for double-digit non-GAAP EPS growth in fiscal 2026, but trimmed its GMPD segment outlook to be at least consistent with fiscal 2025 levels, citing macro uncertainty. Investors should note that operating cash flow for the quarter was strong at $2.9 billion^c, but year-to-date cash generation remains modest at $870 million GAAP operating cash flow, and the company's shareholders' deficit persists.

Ongoing risks include the Department of Justice investigation into Anti-Kickback Statute and False Claims Act issues, branded drug pricing pressures, tariff exposure, and generic deflation. Further detail on fiscal 2026 expectations is expected at the June 12, 2025 Investor Day.

02—Key points

Key Highlights

Revenue flat at $54.9B reported; up 19% excluding the previously communicated customer contract expiration
GAAP diluted EPS of $2.10 (up 96%) included a $105M net litigation recovery; non-GAAP diluted EPS rose 13% to $2.35
Non-GAAP operating earnings up 21% to $807M, with segment profit growth across all operating segments
Fiscal 2025 non-GAAP EPS guidance raised and narrowed to $8.05-$8.15, from $7.85-$8.00
Pharmaceutical and Specialty Solutions segment profit up 14% to $662M; GMPD segment profit up 77% to $39M
Fiscal 2026 outlook: double-digit non-GAAP EPS growth expected, but GMPD segment profit now expected only at least flat with fiscal 2025
Year-to-date operating cash flow of $870M versus $1.68B prior year, with $2.9B generated in the quarter alone; $375M accelerated share repurchase completed

03—Questions

Frequently Asked Questions

Why was reported revenue flat if the business grew strongly?
A previously communicated customer contract expiration (OptumRx, which contributed $8.7B of revenue in the prior-year quarter) offset growth. Excluding that impact, revenue grew 19% to $54.9B, and Pharmaceutical and Specialty Solutions revenue grew 20%.
How did GAAP and non-GAAP results differ this quarter?
GAAP operating earnings of $730M were boosted by a $105M net litigation recovery and a $17M net gain on asset disposals, while non-GAAP operating earnings of $807M excluded these items as well as $152M of amortization and acquisition-related costs. Non-GAAP diluted EPS of $2.35 (up 13%) is the figure management uses to frame guidance.
What drove the guidance raise and what are the outlook risks?
The raise reflects stronger Pharmaceutical and Specialty Solutions segment profit growth (11.5%-12.5%), higher Other segment growth (16%-18%) including the Advanced Diabetes Supply Group acquisition, lower interest expense, and fewer shares. Risks include macro uncertainty, tariffs, generic deflation, branded drug pricing policy, and a Department of Justice investigation into Anti-Kickback Statute and False Claims Act matters. Management will provide more fiscal 2026 detail at its June 12, 2025 Investor Day.

04—Continue

← View all 8-K filings